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Month: October 2012

I noticed recently that, among the links on the right-hand side of this page, we still listed the We Love Local Government blog – which, despite its having been wound up, in characteristic style, several months ago, rather pleased me. It deserves to live on, and, should its belatedly unveiled authors, Glen Ocsko and Gareth Young, happen to see this blog, they may take it as a small personal tribute to them and their … I was going to type ‘baby’, but that would make them filicidists … creation.

WLLG was written by local government officers – often critical of aspects of the world in which they worked, but who managed at the same time to love it – or at least sizable chunks of it, for quite a bit of the time. This, of course, is what made it and them different – from so many of their fellow citizens who achieve only the harshly critical bit. This blog is addressed to these gripers, in the hope that, if ever there were a sequence of events that might arouse in them a tad of sympathy for local councils, it could well be the latest episodes of the Government’s council tax benefit changes, summarised below and using as an illustration Birmingham City Council.

These benefit changes are a pivotal and controversial Coalition policy, revealing what critics claim is the true nature of its welfare philosophy, its commitment to genuine localisation, and its sheer managerial ineptitude. Details are on Birmingham City Council’s website under ‘Council Tax Support’ – so what follows is a brief summary for the late arrivals at the Taxpayers’ Ball.

From next April, the Government is abolishing Council Tax Benefit (CTB), a means-tested benefit currently paid by the Department for Work and Pensions (DWP), but administered by local government – in Birmingham’s case, £100 million to approximately 137,000 council tax payers. Replacing it will be Council Tax Support – financial support schemes determined and operated by local authorities themselves.

This ‘localisation’ of welfare sounds a commendable transfer of responsibilities from Whitehall to town hall – until you examine the attached strings. First, the policy forms a key part of the Coalition’s deficit reduction programme, aimed at reducing the current CTB bill by 10% by strengthening councils’ incentives to get people into work, and cutting the fraud and error that the DWP was unable to control. And councils will need to achieve all this immediately, apparently, as the Government would pay them 10% less for their new schemes than for CTB, creating for Birmingham a funding gap of £10.9 million.

Second, the Government decreed that pensioners receiving CTB must be protected against any reduction in support. In Birmingham this means 54,000 pensioners are protected, while 83,000 working-age recipients (those born after October 1951) shoulder potentially the whole savings burden.

So far, so centralist, for it is only here that the localist part begins, with councils able to devise their own schemes to achieve these savings, provided they do so by January 2013.

In practice, this discretion amounts to three unenviable choices: spreading the funding cut equally across virtually all CTB recipients apart from pensioners; giving the rebate to certain groups only; or continuing with the full rebate, and filling the gap either through raising council tax or finding savings elsewhere, on top of those already being demanded by the Government – for Birmingham, a possible £600 million over the next five years.

The Council’s selected option – essentially a version of the spread-the-pain-equally model – was revealed in early September in two documents: one setting out the proposed tax support scheme, the other asking for residents’ views by 2 December. Almost all working-age people could expect to pay at least 24% of their council tax – which this year would be £178 or £3.43 a week on a Band A property. Main exceptions would be those with a dependent child under six, and those receiving a disability or disabled child premium or war-related pension. A modest contribution to the scheme’s cost should come through removing council tax discounts on second homes, as permitted when the Local Government Finance Bill eventually completes its unhurried progress through Parliament.

Now here, I thought, is where the sympathy might come in – for the contemptuous treatment councils regularly receive, even from Community and Local Government ministers who are supposed to be vaguely on their side.

First, there’s the constitutional arrogance of requiring councils to prepare and consult on detailed schemes before the authorising legislation is even passed. Yes, it’s equally contemptuous of the Queen’s Royal Assent, but it seems almost standard procedure nowadays.

Then there’s the Government’s brand of centralist localism – ‘muscular localism’, as Secretary of State Eric Pickles calls it – which involves both setting all the main rules, then changing them in what ministers must know is the middle of councils’ consultations, but that to them presumably is merely a game.

In late October, weeks after most councils had formulated their support schemes and gone out to consultation, DCLG ministers announced that they’d had a quick whip-round and found an extra £100 million ‘transition grant’ for councils whose schemes were ‘well-designed’ and maintained positive incentives to work.

As they say in professional cycling, if it sounds too good to be true, then it probably is. Ministers’ idea of ‘well-designed’ turns out mainly to mean that those currently receiving full council tax support should pay no more than 8.5% of their council tax liability, or barely a third of Birmingham’s proposed 24%.

So, back to the drawing board – or perhaps not, who knows. An unpredictable share of the £100 million would represent a fraction of councils’ 10% funding cut and complicate budget-making. Besides which, collecting costs will cancel out much of the arbitrary 8.5% tax payments: £1.21 per week on a Birmingham Band A property. The smart money is on most councils sticking with their intended schemes.

Clearly, though, ministers have been spooked by the savage impact on the poorest households of their own inflexible funding restrictions – of which they were repeatedly warned, and which might have been largely avoided, had they allowed councils not just to remove tax discounts from empty properties, but, as proposed by the LGA, to reduce even slightly the 25% single person’s discount.

But no, that was another ministerial rule: “the Government has no intention of introducing a ‘stealth tax’ on eight million people” – a benefit cut on even more, even poorer people being apparently something other than a stealth tax, or anyway one for which councils would take the blame. Now, no doubt, they’ll get additionally blamed, whether they change their proposed schemes or not – and if that lot doesn’t earn them a scintilla of sympathy, I’m at a loss to think what might.

Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.

This week, there is plenty of news about granting 16 and 17 year olds the right to vote. You may therefore be surprised to learn that another group may have their right to vote withdrawn. Okay, I am being slightly flippant here, but there is a potentially serious oversight on whether councillors should be allowed to vote at the full council budget setting meeting.

On a number of occasions I have criticised the Localism Act as a poorly drafted piece of legislation that leaks like the proverbial legislative sieve. From the inability of standards committees to sanction their own members, to questions on whether standing councillors are required to sign a declaration of interest, there are plenty of examples to choose from. So here is another to wet your palate.

Councillors are naturally bound to vote on their annual budgets and also on their allowance packages at Full Council. Nothing too complex about that, you would think. However, the new Declaration of Pecuniary Interest could result in a breach, should councillors vote at their annual budget meeting or on their allowances. As both tax-payers and recipients of allowances, this leaves councillors vulnerable to members of the public lodging official complaints. In all probability, a police investigation would not be pursued but it is a risky situation.

Monitoring Officers with a sharp-eye should be able to circumvent this problem through a motion to Full Council granting dispensations to the council en-bloc. Whether the dispensation lasts for a full four years or for the remainder of council’s term until the election, care is required to ensure that dispensations are kept up to date for all named councillors.

Ensuring the right of councillors to vote at budget setting meetings is an essential component of representative democracy. To forbid that right would be counter to the whole belief in local government. The idea that they could face prosecution for breaching pecuniary interest would be quite ridiculous.

Philip Whiteman is a Lecturer at the Institute of Local Government Studies. He has research interests in the impact of central government and regulators on the role, service delivery and performance of local government and other local bodies. He is also Editor of the journal Local Government Studies.

East Cambridgeshire, East Hampshire, East Northamptonshire, South Hams, South Ribble, West Devon – anything you reckon they might have in common, apart from ‘compass point’ names that for most of us require translation to make much sense: Ely/Newmarket, Petersfield/Alton, Rushden, Totnes, Leyland, Tavistock/Okehampton, if you were wondering.

Top of the DCLG indices for least deprived local authorities? Nice try, but no cigar. No Labour-controlled London or metropolitan boroughs? Getting warmer. Conservative heartlands? Almost there. Ministers’ favourite councils? Oh dear – back to freezing, but freezing’s the clue as well as the direction of travel.

They did the math, and calculated that the offer of one-off central funding equivalent to a 2.5% tax increase, but creating a potential budget gap from 2013/14, was not in their residents’ longer-term interests. So they chose to set their own budgets – insofar as these things are possible nowadays – and raise their tax rates by between 2.5 and 3.5%, the latter being the point at which a referendum and its attendant costs would have been triggered.

Unlike the previous year, when the Government’s financial incentive ran for the four-year funding term and all councils took the money and froze, this time one in ten rebelled – and the biggest single party group were, yes, 16 Conservative councils, for many of whom featuring on a naughty list must have been an interestingly novel experience.

There were, hardly surprisingly, nearly as many Labour councils – though again not those that might have been at the top of most people’s guess lists: no London boroughs, only St Helens among the mets, Leicester, Nottingham, Darlington, Stoke, Preston, Luton, York. But, with the possible exception of the three Teesside unitaries (minus Hartlepool) – Middlesbrough, Redcar & Cleveland, and Stockton-on-Tees – this was no more a co-ordinated, politically driven anti-Government protest than among the Conservative rebels.

Rather, it was councils and their finance officers doing the sums and concluding that this tax freeze offer simply did not constitute for many authorities the advantageous deal that Ministers had tried to claim – before switching their sales pitch to blustering to councillors about how freezing was a moral duty, regardless of its costs.

One of the things that will make the coming few months interesting, at least for detached observers, is that the terms of the Government’s 2013/14 tax freeze offer, announced this week, have changed once again, and can be headlined in one of those ‘Good news, bad news’ games.

This year freezers will receive a grant equivalent to just a 1% tax rise, instead of 2.5% (bad news); but they will also get an extra year’s baseline funding, “to ensure that there is no cliff-edge in funding in 2014/15” – apart, that is, from any already incurred this year (good news); but the referendum threshold comes down from a 3.5% rise to one of just 2% (bad news) – or is it?

Two observations occur to me. The first is to recall all those statements when the Conservatives were in opposition about how damaging capping was, because it took the power of decision about local spending and taxation out of the hands of local voters and handed it to remote central bureaucracies. As we enter the third year of tax freezing by ministerial arm-twisting, it’s really hard to see it as anything other than local budget setting by remote central bureaucracy.

Second, there must be a likelihood of at least a few councils seriously considering the referendum option, and making the case for restricting the speed and severity of service cuts in the general community interest – except that there seem to be so many rather substantial details still to be determined about how these referendums would actually work: the form of ballot; wording of the question(s); timing; all- or part-postal, or maybe included with annual tax demand notices; restriction to council tax payers – to name but a few.

A further non-detail, in addition of course to the cost of the whole thing, is the very principle of having a one-off referendum on a single year’s proposed tax increase, which must have the effect of making long-term planning even more difficult than it is already.

There was a question in the DCLG’s council tax referendum consultation back in 2010 that asked specifically about whether, with the abolition of capping, there was any reason why authorities should be required to calculate a budget requirement each year. The possibility of being able to frame a referendum around a medium-term financial plan, including staged council tax increases over a number of years, might be a more attractive proposition to some councils, and it’s a topic that would seem worth revisiting.

Chris is a Visiting Lecturer at INLOGOV interested in the politics of local government; local elections, electoral reform and other electoral behaviour; party politics; political leadership and management; member-officer relations; central-local relations; use of consumer and opinion research in local government; the modernisation agenda and the implementation of executive local government.